“We are an industrial group in high added value processes.” This motto welcomes you to the Cie Automotive website. And for added value, the one that the Basque company recognizes its CEO. Jesús María Herrera was, by far, the highest paid executive among all the companies listed on the Spanish stock market. For the 2023 financial year, he earned 23.77 million euros thanks, above all, to an extraordinary remuneration to recognize his “effort, worth and the results of his management.”
Cie Automotive, which manufactures automotive components, is not on the Ibex 35 and the average annual salary of its staff (19,000 euros) is one of the lowest among listed companies. His case is a clear example of the chronic nature of wage inequality that has taken hold in many companies, both Spanish and foreign. Herrera earned the equivalent of 1,251 times what his employees earned.
Cie Automotive’s wage gap is undoubtedly an extreme case, but it is also true that the income gap has barely corrected in recent years. This is one of the conclusions of the twelfth edition of the remuneration report prepared by EL PAÍS with the data sent by the companies to the National Securities Market Commission (CNMV). In 2023, the highest paid executive directors of the Ibex 35 (excluding ArcelorMittal) earned an average of 4.71 million euros. This amount is 77.6 times more than the 60,899 euros that the employees of the companies they manage received on average. In 2022 the differential was somewhat higher (81 times), but in 2021 and 2020 it was very similar (76 and 79 times, respectively). The differential is lower than that of Wall Street, the mecca of mega salaries — the gap in 2022 was 272 times, according to data from the AFL-CIO, the main union federation in the United States — but it is similar to that of the United Kingdom, a economy much larger than Spain’s and with more capitalized companies, where the CEO earns on average 80 times the average salary of his staff, according to a report prepared by the High Pay Center think tank.
After Cie Automotive, the next company with the greatest wage inequality last year has the State, through Sepi, as the main shareholder. Indra paid 15.5 million euros to its former CEO, Ignacio Mataix, for different concepts (fixed and variable salary, delivery of shares and compensation). This amount means that Mataix earned 456 times more than the average annual salary received by employees of the technology and defense group.
The third and fourth places in wage gap go to two regulars in this classification: Inditex and Banco Santander, respectively. The textile group paid its CEO Óscar García Maceiras a total of 10.32 million euros. This amount is 286 times higher than the 36,000 euros that the workers of the company owned by Amancio Ortega earned on average in 2023. In the case of the financial entity, its executive president, Ana Botín, received 12.23 million euros between salary and contribution to her pension plan. The figure represents multiplying by 211 times the average annual salary (58,000 euros) that Banco Santander workers received. In the next position on the inequality ladder is a much smaller company in terms of income, profits and capitalization, but whose president is always among the highest paid. Sacyr’s chief executive, Manuel Manrique, earned 8.3 million euros between salary and pension, 193 times more than the 43,000 euros of the construction and services company’s workers.
Payrolls on the rise
The upward salary review was the general trend last year, but this improvement was not linear; The greatest joys occurred on the noble floors. The average salary of the employees of the 100 listed companies analyzed increased by 2.69%, standing at 55,970 euros. In the case of members of the boards of directors, the average remuneration increased by 3.56%, to 405,752 euros. The greatest salary improvements occurred, however, among members of senior management, who on average received 791,658 euros, 8.41% more.
In this last category – which does not include executive directors – some of the large mega-salaries on the Stock Market are also concentrated. Inditex, for example, allocated 116.47 million to remunerate the 22 members of its senior management, that is, they received an average of 5.29 million each. In the case of Santander, the remuneration item for its 14 senior managers totaled 50.3 million, which places the individual distribution at 3.59 million. Other executives with million-dollar salaries were those of BBVA (2.51 million), Iberdrola (2.34 million), Acciona (2.2 million) and Telefónica (2.19 million).
The number of female directors has been increasing. The presence of women in the seats of the administrative bodies of large listed companies is close to 40%. However, the majority have the category of independent or proprietary and very few assume executive tasks. This situation is reflected in the salary ranking. In 2023 there were 90 directors who earned one million euros or more. In this select club, however, there are only three women: Ana Botín (12.23 million), María Dolores Dancausa (Bankinter), with 2.4 million, and Marta Ortega, from Inditex, with one million.
Corporate governance manuals suggest that compensation schemes be balanced so that executives have enough motivation to make the company grow, but not so much that they take unnecessary risks with the aim of maximizing their value in the short term to collect the bonus. However, the salary plans of most boards of directors in Spain continue to give a very high weight to cash payment. Specifically, in the case of Ibex 35 companies, in 2023, 75.99% of remuneration was in cash, 16.37% corresponded to payment in shares, 4.59% to pension contributions. and 3.05% is included in the other category (insurance, transportation, housing).
The directors have pension rights valued at 362 million
Contribution to the retirement systems of executive directors is becoming widespread among large listed Spanish companies. Until less than a decade ago, the periodic injection into the pension of business executives occurred mainly in the financial sector. In banks it was not so common for contracts to include a compensation clause in the event of dismissal equivalent to several years of salary; To compensate for the lack of armor, an amount of money was put into the bankers’ piggy bank annually so that they could enjoy it when their work period came to an end. However, in recent years the allocation for pensions has been spreading like an oil spill to many other sectors.
The executive directors of listed Spanish companies accumulated pension rights (consolidated and unconsolidated) worth 362 million at the end of last year, according to data published in the remuneration reports sent to the National Securities Market Commission (CNMV). and compiled by EL PAÍS.
From an individual point of view, the largest pension in the Stock Market belongs to Florentino Pérez. ACS injected 1.36 million euros into the retirement system of its 77-year-old president last year and the accumulated amount is 50.45 million. In second place is Ana Botín. The retirement fund of the president of Banco Santander amounts to 49.25 million euros after the entity made a contribution of 1.14 million last year. Third place in this ranking is a clear example of how this type of deferred remuneration is becoming popular over time; This is José Manuel Entrecanales. Last year, the president of Acciona received almost the same amount in cash and shares (3.75 million) as the amount assigned to his pension (3.67 million), and he already accumulates 26.69 million in his retirement system. euros. The fourth and fifth positions in the ranking correspond to two bankers: the president of BBVA adds 24.75 million and the former CEO of Santander José Antonio Álvarez accumulates 19.49 million in his retirement system.
Pension contributions and the rest of the components of the remuneration of directors of listed companies (fixed salary, variable salary, payment in shares) must be included in the annual remuneration report, which in turn must be put to a vote ( on a non-binding basis) at the general meeting of shareholders of these companies. The salaries of the directors are usually the item on the agenda that usually attracts the most rejection, but the votes for punishment from the owners, except in specific cases, are still relatively low. In the meetings held in 2023, the negative votes against the salaries of directors in the Ibex stood on average at 8.12% of the total, compared to 9.56% a year before. The greatest opposition occurred in Colonial (28%), Sacyr (25.2%), Merlin Properties (19.3%), Acciona (19.3%) and Repsol (16.36%).
Golden settlements for 766 executives
The first armored manager in history was Charles Tillinghast. It was 1961 and the creditors of Trans World Airlines (TWA) were litigating with Howard Hughes to remove him from the company’s command. The banks signed Tillinghast as the new CEO, but as the fight for control was not yet resolved, they had to include in his contract a clause that included compensation in the event of dismissal. From that moment on, golden parachutes, as they are known in financial jargon, became popular, especially from the 1980s onwards in the heat of hostile takeovers. When the financial crisis broke out, the million-dollar compensation that some executives received after leaving their companies on the brink of bankruptcy opened the debate around these settlements.
At the end of last year, there were 766 executive directors and senior managers with armored contracts on the Spanish stock market. This figure represents a reduction of 4.6% compared to a year before. Following the outbreak of the financial crisis, the European Commission published a recommendation in April 2009 on director remuneration systems. The Commission considered it necessary to ensure that termination payments “do not represent a reward for failure” and suggested that their amount should not exceed the amount equivalent to two years of fixed salary. With this same spirit, the CNMV introduced in the 2015 Good Governance Code update a recommendation to limit shielding and, in addition, give the company weapons to correct possible abuses.
Repsol is the company that claims to have the most executives protected in its corporate governance report, with 217 beneficiaries. In addition to the oil company, companies such as BBVA (52 cases), Grifols (39), Dia (49) and Caixabank and Banco Sabadell also stand out in this section, with 33 golden parachutes each.